Business Segments

9 Months Ended

Sep. 30, 2012

Business Segments

Business Segments

Note 14 — Business Segments

As a result of the acquisition of Dansensor, the chief operating decision maker (the Company’s President and CEO) has restructured the operating segments of the Company effective for the quarter ended September 30, 2012.  In prior reporting periods the Company had three operating segments and one reportable segment, whereas the Company now has four operating segments that are regularly reviewed by the Company’s chief operating decision maker to make decisions about allocating resources and assessing segment performance.  The segment performance is evaluated at segment operating income which is defined as gross profit less selling, general and administrative expenses and research and development expenses.  General corporate expenses, including costs associated with various support functions such as human resources, information technology, finance and accounting, and general and administrative costs, are allocated to the reportable segments primarily on the basis of revenue.  The Company’s four operating segments have been aggregated into three reportable segments based on the authoritative guidance.  The Company aggregated its Other Products and Services operating segment into the Industrial Analyzer Products and Services segment based on minimal business activity and materiality.

The Permeation segment includes instruments and services that measure the rate at which various gases and vapors permeate through a variety of materials.  The Package Testing segment provides customers with the ability to assess package performance, shelf-life, package improvement, cost reduction, sustainability and product safety using Modified Atmosphere Packaging and other technologies.  The Industrial Analyzers and Other segment includes advanced gas analysis and monitoring instrumentation used in applications such as oil and gas exploration, beverage and specialty gas analysis, industrial hygiene and safety, food safety, environmental air monitoring and homeland security.

The accounting policies of the reportable segments are the same as those described in Note 1 to the Consolidated Financial Statements found in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2011.  There were no intersegment sales for the three or nine-month periods ending September 31, 2012 and 2011. The financial information provided for the Package Testing segment for the nine months ended September 30, 2012 includes a non-recurring adjustment of $865,000 related to an inventory fair value purchase accounting adjustment and also includes acquisition-related costs of approximately $790,000.

Financial information by reportable segment for the three and nine-month periods ended September 30, 2012 and 2011 is as follows:

	Three months ended September 30, 2012					Nine months ended September 30, 2012
	Trade Revenue		Segment Operating Income			Trade Revenue		Segment Operating Income
Permeation	$	4,680,999	$	837,371		$	15,753,249	$	3,491,805
Package Testing	5,533,627		(230,263		)	12,745,486		(1,923,758		)
Industrial Analyzers and Other	2,091,525		158,374			6,190,150		196,088
Total	$	12,306,151	$	765,482		$	34,688,885	$	1,764,135

	Three months ended September 30, 2011				Nine months ended September 30, 2011
	Trade Revenue		Segment Operating Income		Trade Revenue		Segment Operating Income
Permeation	$	5,320,313	$	1,921,621	$	16,720,817	$	5,606,333
Package Testing	2,186,517		307,431		5,219,654		725,287
Industrial Analyzers and Other	1,955,986		19,500		5,678,994		(285,303		)
Total	$	9,462,816	$	2,248,552	$	27,619,465	$	6,046,317

Total identifiable assets by reportable segment are as follows:

	September 30, 2012		December 31, 2011
Permeation	$	17,791,619	$	16,555,764
Package Testing	21,463,620		5,100,859
Industrial Analyzers and Other	3,995,020		3,552,840
Unallocated - Corporate	11,799,583		14,495,048
Total Assets	$	55,049,842	$	39,704,511